Uses and Abuses of Powers of Attorney
Powers of Attorney Generally
What is a Power of Attorney?
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General authority conferred upon an individual
Requires the capacity to appoint
And lasts only as long as the individual has that capacity / is alive.
Relationship between donor and donee is as an agent.
Fiduciary duty of donee.
Formal Requirements
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Powers of Attorney Act 1971 – By Deed.
Example (but not required) form set out in the Act.
Other provisions:
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Proof of existence of power
Protection of third parties where revoked
How to operate the power (i.e. how do you sign?)
Termination / Revocation of Powers of Attorney
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Express revocation
Intervening incapacity (ordinary powers)
Death.
Powers of attorney granted as security.
Enduring Powers of Attorney
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Intended to operate post supervening incapacity
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No longer capable of being created
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Require registration where individual begins to lose capacity.
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And intervening restrictions pending registration.
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Relatively simple documents with few restrictions on their terms.
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Restriction on the making of gifts (see below).
Lasting Powers of Attorney
Personal Welfare Attorneys:
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Can only operate where the individual cannot make the decision
Property and Affairs Attorneys:
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Extends to all of P’s property and affairs
Can exist before becomes incapable.
Restriction on making gifts (see below).
Appointment can be:
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Joint Appointment;
Joint and Several; or
Joint for some things and joint and several for others.
Number of decisions regarding validity of joint / joint and several
appointments.
Revocation:
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Expressly by donor
Bankruptcy of donee (but not for personal welfare)
Disclaimer
Death of attorney
Dissolution / annulment of divorce or civil partnership between donor and
donee.
Incapacitated attorney
Effect of revocation in respect of one attorney where the power is joint is
to revoke the whole power.
By the Court
Trustees and Powers of Attorney
Trusteeships and powers of attorney
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Power of Attorney Act 1925 section 25
Power to delegate by POA but limited for 12 months.
Must give notice to person with power to appoint trustees / other trustees.
Cannot use EPAs/LPAs
Where the individual is also a beneficiary of land: Trustee Delegation Act section 1:
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No restriction on giving a power of attorney in respect of land, capital
proceeds of land or the income of land where the donor is interested in the
land, capital or income.
Delegation by Trustees to beneficiaries of a trust of land: S9(1) TOLATA 1996:
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Trustees able to grant power of attorney to any beneficiary (over 18) who has
an interest in possession in the land in relation to their functions as trustees in
respect of that land.
Attorneys obtaining grants of Probate
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NCPR 31
Limited for ‘use and benefit’
So terminated if the attorney is terminated.
Also terminated by the death of the donor.
Notwithstanding that the attorney is the personal representative and so owes
all the usual duties of a PR.
Gifts and Powers of Attorney
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Ordinary Powers – restricted by usual restrictions on fiduciaries
Under either LPA or EPA, gifts restricted by statute.
Save (i) on customary occasions or (ii) to charities to whom the donor made or
might have been expected to make gifts.
Some examples of flagrant abuse: Re GM [2013] WTRL 835.
But invalid use may be valid / validated if the donee had other (valid)
authority or if gifts are ratified, see Day v Harris [2014] Ch 211.
Dealing with Abuses of Powers of Attorney:
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Obtaining interim injunctions from the Court / Court of Protection.
Ability of the Court of Protection to revoke POAs
Claims for recovery of monies
Claims against third parties (e.g. banks)
Finally the practical issues:
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Persuading the financial institutions you have a POA (proof?)
Operating the accounts thereafter